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2008
MEDICARE PART "D": SIMPLE EXPLANATION
Bob
Fassbach. editor, www.SeniorArk.com
You may also want to see Medicare Parts A-B-C-D Made
Simple
THE BASIC PLAN
So what are the basics
of Part "D"?
The bill
signed by President Bush is 411 pages long, and
takes a CIA decoding team to understand. Do we dare
try to summarize it on one page?
Since 2006, Medicare Part D offers some help with prescription drugs. The coverage is
voluntary, handled by private insurance companies, and the monthly premium varies depending on how much
coverage you have. You can get the part D benefit in a policy
that is considered a "stand alone" (covers only
drugs), or in a Medicare Advantage plan which
incorporates Medicare Parts A, B, and D in one policy
(and is sometimes called Medicare Part C).. For a more complete description of Part D, as
well as other prescription drug information and links, see,
SeniorArk Main
Medicare Page,
Charts,
Fiasco,
and the
Donut Hole.
Under Medicare Part D, private insurance companies
(Prescription Drug Plans, called PDPs, or existing
Medicare Choice plans, which will be renamed Medicare
Advantage plans) will enter into contracts with the
Department of Health and Human Services to provide
insurance for prescription drugs. The coverage and
requirements, such as use of formulary drugs, under
the plans will vary by region to reflect differences
in provider costs and patient demo- graphics. In 2006,
the premium averaged $35 a month ($420 a year) , and
by 2008 this has gone over $40.
To assess what is best for you, talk with a senior
representative in your state. There are folks employed
to do this very thing. Or go to
www.medicare.gov.
2008
*First
the enrollee pays a $275 yearly deductible.
*Next Medicare pays 75
percent of drug costs of the next 2250 (another $558.75
out
*Next, the enrollee pays
100 percent of costs until total drug costs reach
5,726.25
(another $3,216.25 out
of pocket in the doughnut hole).
*We have now reached what
Medicare calls the "stop-loss" threshold. From this
point,
thru the end of the
calendar year, Medicare pays approximately 95 percent of
your
*That means the Part D
catastrophic protection will not begin until the
individual's total
spending reaches
$4,050 , not counting the $420 or so annual premium.
The premium will increase
over time according to a formula similar to the one used
by
Medicare to regulate
Part B premiums. The Congressional Budget Office (CBO)
expects the average
premium to rise from $35 to $58 a month between 2006 and
The plan
deductible, initial benefit limit and
stop-loss threshold
will each be indexed to
the growth in per
capita Part D drug spending by Medicare beneficiaries.
Since such
spending is expected to
rise much faster than the rate of inflation, the CEO
believes
that by 2013 the Plan
deductible will increase to $466, the initial benefit
limit will rise to
$4,000 and the
out-of-pocket stop-loss threshold will increase to
$6,400.
The legislation bans Medigap
prescription drug policies for anyone using Part D. As a
result, many seniors will
actually spend more on drugs than they would without
Part D.
Medigap policies for Parts A
and B of Medicare will remain legal.
In order to encourage
employers who already provide drug coverage to Medicare-
eligible seniors to continue
doing so, the law authorizes subsidies and tax benefits
worth an estimated $86
billion for such employers. Public employers like the
federal
government will be eligible
for these subsidies, though at the moment it is not
clear who
will receive them-the FEHBP
plans or employing agencies (like the USPS).
As you see, no simple
explanation of Medicare Part "D" is really possible.
Perhaps this
chart will help. The
SeniorArk links below the chart will also expand on the
program.
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This
is how it looks in Chart Form for
2008 |
|
AMOUNT
& ITEM |
WHAT YOU
PAY |
WHAT
MEDICARE PAYS |
|
$420
PREMIUMS (varies) |
$420
|
$0 |
|
$275
DEDUCTIBLE |
$275
|
$0
|
|
(25% / 75%)
NEXT $2,235 |
$558.75
|
$1,676.25 |
|
$3216.25
"DOUGHNUT HOLE" |
$3,216.25 |
$0
|
|
TOTAL |
$4,470
|
$1,676.25 |
|
SO UNTIL
$6,146.25 IS SPENT, YOUR COST IS $4,470
($4,050 if not counting premiums) |
|
AFTER THAT
YOU PAY $2.25 FOR EACH GENERIC, OR $5.60
FOR EACH BRAND NAME, OR 5% OF THE
TOTAL OF EACH PRESCRIPTION,
WHICHEVER IS THE HIGHER NUMBER. EXAMPLE: A
$200 DRUG COSTS YOU $11.20. THIS SO-CALLED
"CATASTROPHIC COVERAGE" CONTINUES ONLY
UNTIL DECEMBER 31, 2008 |
|
ON 1/1/09
IT ALL BEGINS OVER AGAIN, WITH HIGHER
PREMIUMS AND DEDUCTIBLE, AND A LARGER
DOUGHNUT HOLE.
Remember, if
you have been in Part D for less than a
full year in 2007, being in for a full 12
months in 2008 may mean that the
doughnut hole takes on a greater
significance for you. |
Part "D" Fiasco, Congress Can Do Better
Part "D" in
Chart Form, 2006, 2007, 2008
2008 Part "D" Guidelines |
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